Comments

Are we attracting the wrong kind of Mining Entrepreneurs?

The Case of MRC, Xolobeni and Tormin

South African wealth is founded on our extraordinary mineral bounty, conservatively valued at over $3 trillion (R36 trillion). Our future is dependent on how we manage this geological legacy. We can either harness the full spectrum of opportunities or lay ourselves open to what is known as the “resource curse” where natural resources are exploited by unscrupulous or corrupt entities, with minimal national benefit. A recent example provides some insight in how we appear to be headed down the wrong path.

Most people familiar with the mining landscape are aware of the well-publicised attempts to gain mineral rights to access the apparently lucrative wild coast heavy mineral sands, known as Xolobeni, that have repeatedly failed. Not only is this resource located amidst a rich, relatively pristine ecosystem but this is hosted within an equally rich and dynamic social fabric, protective of its cultural and natural heritage.

The erstwhile developer of this resource is a relatively unknown minor listed Australian mining company, Mineral Commodities Limited, known as MRC, headed by one Mark Caruso. Caruso creates the impression of the archetypal “ocker,” a rough and ready Australian bloke, prepared to get things done come what may.

Over the past 18 months Caruso has commissioned a new mineral sands mine called Tormin, some 350 kilometers north of Cape Town. Permission and rights to operate Tormin were gained by the former MD, South African Andrew Lashbrooke. These two have subsequently fallen out and have become embroiled in legal action in Cape High Court, where Lashbrooke seeks substantial financial redress and damages.

Tormin has also been at the centre of serious allegations that its methods of operation are illegal and irregular. It has removed tens of thousands of tonnes of garnet and ilmenite that it has not received the requisite permissions to extract. These materials have illegally been stored in informal stockpiles on agricultural land.

From an environmental perspective, a lack of suitably careful mine management has seen cliffs adjacent to the treatment plant collapse onto the beach. The company has changed its mining methods without due permission or consultation and also built illegal hard breakwaters and jetties on the beach.

On top of this, the trucks delivering materials from the mine have seriously damaged hundreds of kilometres of road by transporting materials down minor backroads instead of using the approved route. Some of the materials are radioactive and require prominent identification but vehicles are allegedly improperly identified, monitored or managed.

Local communities in Lutzville and Koekenaap are up in arms because promised benefits from the mine have failed to materialise. Instead of local job creation, workers have been brought in from Xolobeni in order to curry favour from that community.

These community tensions have resulted in allegedly illegal protests. In November the police arrested 28 community members who await finalisation of the case, with the next hearing due in July. Community leaders accuse mine management of arrogance and of only dealing with selected ward councillors who are compromised through “benefits” provided by the mine. The community feels let down by the justice system and elected leaders.

MRC has pursued a similar modus operandi in Xolobeni, where for years it has pitted members of the community against each other in order to gain permission to access the resource. False petitions have been compiled, and violence and intimidation has recently resulted in a restraining order being issued against “leaders” associated with MRC. These conflicts have been widely covered in the media and have even become the subject of an award winning film, “The Shore Break.”

However MRC, and Caruso in particular, came to South Africa having apparently learned some useful tricks in ingratiating local officials and appointees during previous mining ventures with his UK listed company, Allied Gold, in the Solomon Islands in the South Pacific. Caruso gained the rights to the largest known gold resource in the Solomons, Gold Ridge, where the land rights had controversially been signed away by the resident community in a deal which created longstanding and significant social rifts. After Allied sold Gold Ridge the mine was subsequently shut down because infrastructure was insufficiently robust to deal with local flooding. Similarly poor community relations have dogged MRC’s other investments in gold mines in Papua New Guinea and Sierra Leone.

It is notable how these patterns echo the experiences of those involved in both the Tormin and the Xolobeni mineral sands resource projects. Not only has MRC been instrumental in setting community and even family members against each other at Xolobeni, through sly selection and appointment of various community proxies who have been given vehicles and benefits such as executive positions in subsidiary companies Blue Bantry and Xolco, but it has spread its influence far wider.

For instance well-supported allegations exist that MRC’s attempts to exploit the Xolobeni resource is intimately linked both to the highly contentious wild coast N2 toll road debacle, as well as to a bizarre political decision by the President to illegally interfere in regional traditional leadership matters by removing rightful amaPondo chiefs in the area. This matter was eventually decided by the Constitutional Court, which reinstated the very leaders who happened to question both the controversial N2 toll road and the Xolobeni mineral sands mine.

The link between the mine and the toll road relates to the necessity for a suitable route to transport nearly half a million 40 tonne truck loads of resource to the Durban port. It also aligns with government’s insistence that mega-projects will deliver improved living standards, despite numerous studies showing otherwise. The fact that MRC has established intimate relationships with various key political and traditional leadership stakeholders is not co-incidental.

South Africa needs to manage investment and exploitation of our mineral resources in environmentally and socially responsible and sustainable ways. We need to maximise the benefits and beneficiation of our resources. Good behaviour must be encouraged, bad practice curbed.

It appears we have failed to follow these fundamental precepts in the case of MRC. The company has created zero local beneficiation, in fact the MRC/ Lashbrooke court case centres on export of the garnet resources that were to be locally beneficiated. Now MRC simply ships its ill-gotten gains offshore to China and Australia, while creating significant social and environmental externalities.

Judging from this case it appears the Department of Mineral Resources (DMR) is not a suitable agency to promote and monitor the planning and implementation of mining. Extensive interaction has proven the Department to be remarkably un-transparent and non-responsive to enquiries about MRC’s mining operations, which should be in the public domain. Since DMR assumed oversight of environmental compliance the flow of information on mining in general, and Tormin specifically, has essentially dried up.

If we are to maximise the benefit of our resources we cannot countenance the non-transparent oversight of mining and the externalisation of social and environmental impacts. Our mineral resources must benefit the nation, not just the entities exploiting them. In order to do so we need transparent due diligence processes, not a free for all where resources are exploited by unscrupulous opportunists.

Comments submitted

Mariette Liefferink, CEO of the Federation for a Sustainable Environment introduces an answering statement: We are not raising any new matters in our answering statement. As such, it is our understanding, grounded upon the 2010 EIA Regulations, that the Respondents do not have a right of response. We do, however, attach as a postscript, in a separate document, our response to the Site Visit, which was conducted on the 13th of January, 2017, in which new information is raised and as such, according to or understanding of the 2010 EIA Regulations, the Respondents have a right to respond and the FSE, in turn has a right of reply.
Download the answering statement.

The Case of MRC, Xolobeni and Tormin
South African wealth is founded on our extraordinary mineral bounty, conservatively valued at over $3 trillion (R36 trillion). Our future is dependent on how we manage this geological legacy. We can either harness the full spectrum of opportunities or lay ourselves open to what is known as the “resource curse” where natural resources are exploited by unscrupulous or corrupt entities, with minimal national benefit. A recent example provides some insight in how we appear to be headed down the wrong path.

Ms Margaret-Ann Diedricks Director General of the Department of Water and Sanitation presented the strategic objectives for the coming 5 years and the reflection of the Water and Sanitation Summit Declaration and Outcomes.

Academics and the FSE consider residential townships, edible crop production and livestock grazing to be high risk land-uses for tailings storage facilities (TSFs), TSF footprints and areas within aqueous or aerial zone of influence of TSFs and metallurgical plants in South Africa. Failure by regulators and industry to agree on suitable ‘soft’ end land-uses and buffer zones could exacerbate liabilities for the City of Johannesburg by resulting in subsequent land-uses that are sub-economic or risky.

While mining is an important contributor to the SA economy it is has the potential for significant negative impacts on the environment. In South Africa the psychological dependence on the mining industry seems to extend beyond cost/benefit, a phenomenon evidenced in the metaphors used to describe the industry’s significance. The recently developed National Development Programme, however, does not state that mining investment and production is “urgent”, but rather that “[i]t is urgent to stimulate mining investment and production in a way that is environmentally sound…”.

Comments on the Proposed Classes of Water Resource for Catchments of the Crocodile (West), Marico, Mokolo And Matlabas in terms of Section 13(1) (A) of the the National Water Act, 1998, Act No 36 Of 1998

DRD Gold's organizational structure is such that it is divided into dozens of sub-companies, with each sub-company being responsible for its own production and maximizing its own profit. It is structured in such a manner that the profits of one sub-company cannot offset the liabilities and impacts of another sub-company. The result is that the impacts and the pollution costs of beleaguered sub-companies are often carried by communities, the environment and future generations and not by DRD Gold.

Notwithstanding the establishment of the Wonderfonteinspruit Regulators Steering Committee on the 21st of December 2007 andÂ admirable intentions of the Wonderfonteinspruit Regulators Steering Committee to address an urgent environmental matter, and the honourable Minister's response, the following issues remain unaddressed at the time of writing:

FSE’s Preliminary Response to Platmin’s Note For Investors For Information Posted On The Platmin’s Website On The 16 January 2013While cognisance is taken that the Platmin’s mining activities may result in job creation and contribution to the Gross Domestic Product (GDP), it may well come at significant cost and existential risks to other sectors, such as tourism, eco-tourism and conservation with resultant job losses and curtailing of contribution by the said sectors to GDP. Furthermore, it will result in the loss of common natural resources on which the rural people within the North West Province depend. Land degradation and the loss of biodiversity because of mining affect poor people most, as they often depend directly on natural resources. Poverty is wide-spread in the above-mentioned areas notwithstanding the rich platinum group metal resources.

The hazardous mining by-product raises two questions – who’s to blame and who should pay.
The acid mine drainage crisis is going to cost someone a lot of money, but probably not the people who caused it. The “polluter pays” principle was next to impossible to apply to the acid mine drainage problem in a retrospective way, said Marius Keet, chief director for mine water management at the department of water and sanitation.

The Federation for a Sustainable Environment is proud to announce the launch of the booklet titled “Rehabilitation of Mine Contaminated Eco-Systems. A Contribution to a Just Transition to a Low Carbon Economy to Combat Unemployment and Climate Change” by Mariette Liefferink of the Federation for a Sustainable Environment (FSE). The booklet was commissioned by the Alternative Information and Development Centre (AIDC) in collaboration with the Friedrick Ebert Stiftung.

Last week, the coalition of eight civil society and community organisations that has been resisting the proposed coal mine inside a protected area and strategic water source area in Mpumalanga launched further proceedings in the Pretoria High Court.

Disclaimer: This site features articles written by journalists who have contacted the FSE for information and input. The FSE is not responsible for the content of the final published article, or the accuracy of the information contained. The articles remain the copyright of the original authors and/or publishers. If you reproduce the article you must have the permission of the original author/publisher. All images and logos are copyrighted to their respective owners.